Finance / Security

[lowflyer]

Just a quick question for those who have or are in the know. I see most camper sellers offer finance these days I'm guessing most just fob the customer off to a broker. As I am about to put a big wod of cash down on a second hand camper was wondering if these finance companies actually use the camper as security like they do with a car or just offer the finance as a personal loan. I will do a revs check (or whatever they call them) first, just don't want to have some big hairy bloke with "Hate" tattooed on his forehead showing up on my door steep looking to repossess it.

[chester ver2.0]

Depends on the company and also the location of where you are buying

For example no finance company in perth will allow you to use motor bike, jet ski etc for security atm as with the mining downturn there are so many on the market

The NAB no longer allows you to use vehicles as security any more and do it as a personal loan

Most credit unions still allow the goods as security last time i looked

[Bird]

I will do a revs check (or whatever they call them) first

I didnt think you can do a REVs on trailers?

[TimE]

I didnt think you can do a REVs on trailers?

It is now called a PPSR check, look here https://www.ppsr.gov.au/buying-motorcycle-trailer-caravan-or-other-motor-vehicle

Don't use REVS checks, they are private companies that will charge you a premium for the same info you will get from the Gov site.

[MattMu]

Definitely do the PPSR check and YES they do hold security on camper trailers...as I just found out.

The MDC I bought privately from a lovely old couple, unbeknownst to them, had security still on it from the people they bought it from!! It was a huge surprise and quite a bit of hassle to deal with the finance company as neither of us were "their" customer! After some discussion into the privacy act and that we DONT want their details and as such, there is no violation of the privacy act we simply need confirmation of the encumbrance.
Unfortunately some finance companies are quick and efficient at lodging an encumbrance but rather tardy when someone discharges a loan and the finance company should then remove it.
As was our case, the day I enquired after having the seller unsuccessfully trying for two days, I had the certificate of clear title as the load had been discharged and the finance company had simply not completed their paperwork.
For $25 is a small price to pay for peace of mind.

Matt.

[JCOJ]

Make sure you do your research.

The interest rates, plus fees and charges, on personal loans can be quite high. You could be far better off re-drawing on your mortgage with interest rates so low, and usually no redraw fees.

The only catch is, you have to make the monthly payments the same amount as you would with the personal loan, but then it will just be paid off quicker than the personal loan would have been.

[fergy]

Make sure you do your research.

The interest rates, plus fees and charges, on personal loans can be quite high. You could be far better off re-drawing on your mortgage with interest rates so low, and usually no redraw fees.

The only catch is, you have to make the monthly payments the same amount as you would with the personal loan, but then it will just be paid off quicker than the personal loan would have been.

more depth please how does this work?

[carlyle]

I have finance on my camper and is secured just like a car under a chattel mortgage, the interest rate around 5.5%. I have access to business bankers in my field so not sure whether the same is easily available to the public but they are definitely out there.

Fergy, what JCOJ is meaning is if the quote for personal loan at 12% was repayments of $1000 a month, then if you borrow against your home by redrawing as long as you increase your repayments on your home loan by the same amount you will end up paying less interest overall and pay that extra drawdown off quicker than a personal loan due to their being less interest. Where the kicker comes is if you can then maintain that extra payment after the camper is repaid you will also pay your house off quicker.

Whatever you do don't redraw on the home loan and just keep repayments same or increase by the minimum you will end up taking 20 years plus to pay off the camper and probably pay double its original price in extra interest.

[briann532]

Make sure you do your research.

The interest rates, plus fees and charges, on personal loans can be quite high. You could be far better off re-drawing on your mortgage with interest rates so low, and usually no redraw fees.

The only catch is, you have to make the monthly payments the same amount as you would with the personal loan, but then it will just be paid off quicker than the personal loan would have been.

That's exactly what we do when we buy "toys".....
We get quotes for a personal loan then make the exact repayments quoted, but on a redraw of the loan.
That way its paid off a lot quicker with lower interest and we actually pay back a lot more and help the mortgage situation.....

[fergy]

Thanks guys
I thought what jcoj meant was you apply to have it put on your mortgage and then the bank changes the payments for the life of the personal loan
From what I have seen most people get the stuff put on there mortgage and all it does is increase the life of the loan
Have never been a fan of redrawing your mortgage but done like you mention it would be a good thing
May have to look into it as most things we do are chatlet mortgages and there is no joy in paying out early

[lowflyer]

Thanks every one. Bought my Leisure matters ranger today PPSR done and all clear. Pics to follow soon :worthles:http://www.myswag.org/Smileys/classic/worthless_thread_wo_pics.gif

[prodigyrf]

I'm old school. That means you don't ever borrow for consumption but only for investment as consumption is a one off sugar hit before you have to forgo even more consumption in the future. Ipso facto you only borrow to back yourself in business or to put a roof over your head and perhaps education to increase your stock of human capital. Borrowing for consumption is a mugs game as I drum into the kids.

[Fizzie]

Just remembered that Prado2004 on here is a finance broker & may be able to help you out: http://www.myswag.org/index.php?topic=47104.0 

[Aaron Schubert]

Thanks guys
I thought what jcoj meant was you apply to have it put on your mortgage and then the bank changes the payments for the life of the personal loan
From what I have seen most people get the stuff put on there mortgage and all it does is increase the life of the loan
Have never been a fan of redrawing your mortgage but done like you mention it would be a good thing
May have to look into it as most things we do are chatlet mortgages and there is no joy in paying out early

At the end of the day its just about being comfortable with the decision you make. It's more sensible to use money from your mortgage, either via offset account or redraw at 4% interest than to take out a separate loan at 5 - 20% interest.

I have to say though, I agree with Prodigyrf; borrowing money for a liability isn't good practice

Aaron

[fergy]

At the end of the day its just about being comfortable with the decision you make. It's more sensible to use money from your mortgage, either via offset account or redraw at 4% interest than to take out a separate loan at 5 - 20% interest.

I have to say though, I agree with Prodigyrf; borrowing money for a liability isn't good practice

Aaron

yeah that's a good way of thinking
as for borrowing for a camper
I have built a business up over the last 9 years from nothing, any spare coin I ever had went into it
at the beginning it was paying back loans but once they were paid off I started using cash to buy equipment
whenever I had any excess coin it went into the offset account for the house loan
we currently pay 2.4 times the minimum payments on our mortgage
we are along way in front on our mortgage and only have 1 piece of equipment financed through the business
the dear wife would like a caravan
without compromising the rate we are paying off the mortgage I would like to get her one
what is the best way of going about it
we would normally have the cash there but I seen a good deal on an iveco and that sorted that out
fergy

[barraboy]

Hi Fergy,

I am a finance Broker and ex Banker . The cheapest way forward would be to simply take the funds for the new purchase from your offset or redraw and then continue to make the 2.4 times the normal home loan repayments. Seems to me that you are well on top of your situation. I would always like to see clients paying off non tax deductible debt first. If you need any working capital for your business in the future I would recommend raising a tax deductible debt for this in preference to paying off your  home loan.

[scblack]

. It's more sensible to use money from your mortgage, either via offset account or redraw at 4% interest than to take out a separate loan at 5 - 20% interest.

No it is not that simple sorry.

If you have a loan at 10% for $30k and pay it off over 3 years you'll pay very approx. $9,000 interest. ($30,000 @ 10% = $3,000 per year) ($3,000 * 3 years).

If you add to the mortgage at 4% for $30k and pay it off over 15 years you'll pay very approx. $18,000 interest ($30,000 @ 4% = $1,200 per year) ($1,200 * 15 years)

That's very rough and ready calculations, but due to the MUCH longer time funds sit on your mortgage you end up paying much more interest over the years.

If a person has the determination to increase payments for the added money on the mortgage it may work in your favour. But experience shows that is very RARE over time due to changed circumstances.

[fergy]

If a person has the determination to increase payments for the added money on the mortgage it may work in your favour. But experience shows that is very RARE over time due to changed circumstances.

pretty much what I have seen over and over

[Nomad]

It's perfectly feasible to use your home loan redraw as a line of credit. It all depends on your personal situation, cash flow and spending habits.

Some times I owe nothing on my home loan sometimes I owe alot. But it is generally by far the best rate and terms you'll get on any loan. Not to mention you generally don't even have to talk to your bank and

You just have to be aware that it is dumb to put a short term asset (i.e a caravan / car whatever) onto a long term loan. But as mentioned get the quote on a personal loan and match those repayments to your home loan you can be a long way infront.

Cheers

[Bird]

I'd love to be one of those people who could pay cash for everything... 

****ed if I know how you save 100k for a car, and 80k for a trailer and still live...

[nab]

My mate recently was about to pay off the mortgage and was looking to upgrade the car and do renos etc. The advice given was to leave a $5k balance on the mortgage (effectively not paying it off) until he was ready to do the renos and buy a car. Then just put the renos/car onto the mortgage. Great rate, no need to got through the hassle and cost of applying for another loan etc etc.

[Aaron Schubert]

No it is not that simple sorry.

If you have a loan at 10% for $30k and pay it off over 3 years you'll pay very approx. $9,000 interest. ($30,000 @ 10% = $3,000 per year) ($3,000 * 3 years).

If you add to the mortgage at 4% for $30k and pay it off over 15 years you'll pay very approx. $18,000 interest ($30,000 @ 4% = $1,200 per year) ($1,200 * 15 years)

That's very rough and ready calculations, but due to the MUCH longer time funds sit on your mortgage you end up paying much more interest over the years.

If a person has the determination to increase payments for the added money on the mortgage it may work in your favour. But experience shows that is very RARE over time due to changed circumstances.

Or, you could pay the 30k off in 3 years from your offset account, and pay only $3600 in interest, not $9000. It isn't a matter of whether it may work in your favour, it does work in your favour, massively. The only variable is whether you treat the money as 'borrowed' or not. If you have a mortgage, effectively every dollar you spend is being charged at 4%.

Aaron

[McGirr]

What happens if you don't have a mortgage. 

Mark

[Aaron Schubert]

What happens if you don't have a mortgage. 

Mark

Then you either save up enough or borrow it at the best interest rate possible.

[Aaron Schubert]

I'd love to be one of those people who could pay cash for everything... 

****ed if I know how you save 100k for a car, and 80k for a trailer and still live...

Who says you need a 100k car and 80k trailer?! One has to live within their means.

It's always a balance between lifestyle and finances. If you are happy to pay a bit of extra money for the lifestyle benefits then getting a loan is an option. However, a lot of people don't fully understand what it costs them over time.

Aaron